The Discount Rate Assigned to an Individual Project Should Be

question 79

Multiple Choice

The discount rate assigned to an individual project should be based on:

• A) the firm's weighted average cost of capital.
• B) the actual sources of funding used for the project.
• C) an average of the firm's overall cost of capital for the past five years.
• D) the current risk level of the overall firm.
• E) the risk level of the project itself.

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Definitions:

Credits

Accounting entries that increase liabilities or decrease assets, representing the opposite of debits.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account, on a company's balance sheet.

Credit

A bookkeeping record that raises either liabilities or equity or lowers an asset or expense.

Abbreviated

Refers to shortened or condensed forms of words, terms, or documents, often used to save space or time.